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Which Came First . . . The Chicken or the Egg Default Swap?

A Fable for Our Time
Posted September 22 2008 03:10 PM by Doug McColloch 
Filed under: Miscellaneous, Doug McColloch

Once upon a time . . . .


Once upon a time, in the village of  Suckerland, there lived a humble farmer. Let’s call him “Farmer John”. Now, Farmer John worked very hard in his fields all year long growing wheat, corn, soybeans, rutabagas, Brussels sprouts . . . all sorts of crops, basically. He also kept a henhouse with some chickens that laid eggs. Farmer John used to refer to his henhouse as his own personal “nest egg” that he could depend on to tide him through tough times---say, if a cold snap should ruin his crops, or if the price of commodities plummeted. Farmer John even hoped to retire one day from the backbreaking labor of year-round farming, and spend his retirement making a simple living from raising his chickens and selling their eggs.

One day in the spring, Farmer John set out to leave his house to work in the fields all summer. He realized he needed a watchdog to guard his henhouse, but none could be found. Soon, a doglike fellow appeared on the scene---let’s call him Mr. Fox---with an offer to guard the henhouse all summer long. “Don’t worry, Farmer John,” said Mr. Fox. “I’ll guard these chickens, and the eggs they lay, as if they were my very own family.” So off to work went Farmer John, leaving Mr. Fox in charge of the henhouse.

Soon, Mr. Fox’s friends, Mr. Wolf and Mr. Weasel, showed up at the henhouse, claiming to be hungry and ravenous. “We haven’t had a good meal in ages,” said Mr. Wolf, spying the chickens inside the henhouse.

“You don’t look very hungry,” said Mr. Fox, looking at Mr. Wolf’s round tummy.

“We’re always hungry when there’s a free meal to be had,” said Mr. Weasel.

“Don’t worry, Fox,” said Wolf. “We only need to eat a couple of these chickens, and by the time Farmer John returns, more eggs will have hatched and there’ll be more chickens than ever in here. He’ll never even know they were missing.”

So the gate to the henhouse flew open, and Fox, Wolf and Weasel strolled inside, helping themselves to the fattest blue hens they could slaughter, and gorging themselves ‘til their bellies were swollen.

The next day they helped themselves to more fat hens, and the day after that they feasted again, and the day after that as well. And after a few weeks, they realized that nearly all of the chickens were gone from the henhouse, and very few eggs had been laid.

“Uh oh,” muttered Mr. Fox. “What’ll we do now? Farmer John will be coming home one day very soon.”

But Mr. Fox was all alone now, for Wolf and Weasel had fled the scene, already in search of the next free meal.

Fox sat and puzzled over the matter awhile, then decided to take the remaining chickens to market and trade them for as many eggs as he could find. That way, he reckoned, at least there’d be plenty of chickens in the henhouse after they’d all hatched. So he gathered up what chickens were left, and swapped them at the market for a basket of eggs.

Poor Mr. Fox---when he returned to the henhouse and started counting the eggs, he realized there weren’t nearly enough. Farmer John would surely see that half his chickens were still missing! So Fox stopped and puzzled over the matter again, and realized he would need to find more eggs. So he gathered up every last egg he could find in the henhouse and trundled them off to market to swap for still more eggs. There had to be cheaper ones to be found on the open market, Fox thought, and as a matter of fact, there were: at the market, he found a huge basketful of eggs that were trading for cheap---a hundred eggs for each single chicken egg.

Fox approached the egg merchant. "Are these eggs really the same as my chicken eggs?"

"Absolutely!" exclaimed the egg merchant. "Taste exactly the same, matter of fact. My, er, chicks laid a bumper crop this year. I can't possibly consume them all, so why don't you go ahead and take all of my eggs in return for those eggs of yours? There's thousands of 'em here---why, your investment today will multiply a thousandfold in no time."

Fox sat and stared at the eggs in the basket for awhile. Sure, they were smaller, and different in shape and color, too, but being a fox (and having more cleverness than brains), he figured this was his sure way out of a terrible jam. And so he traded all of his remaining chicken eggs for thousands of the smaller eggs, and he hauled them back to the henhouse where he carefully incubated and cared for them.

After a few days, he began to hear the eggshells starting to break, with tiny little beaks poking out of the shells, and Fox, overjoyed, collapsed in exhaustion at the henhouse gate.

Not long after, Farmer John returned home after a summer of toil. There had been a drought all season long, and most of his crops had died on the vine. He needed his chickens and their eggs more than ever to get him through what promised to be a long, tough winter. Approaching the henhouse, he saw Fox sleeping peacefully.

“What’s going on here?” Farmer John bellowed. “I thought I’d hired you to guard my prized chickens.”

“I have, Farmer John---take a look for yourself!” Fox said with delight as he flung open the gate.

Both Farmer and Fox recoiled in horror---the henhouse was filled with snakes!

“What in the world is going on here?” the farmer cried. “What have you done with my chickens, and where are my eggs? How did these infernal reptiles get here instead?!?”

“Hmmm,” Fox mumbled, fumbling for an explanation. “Well, have you ever tried snake meat? Tastes just like chicken.”

“I can’t sell those snakes, or their eggs! Nobody wants them, they’re worthless!” Farmer John wailed. “I’m wrecked, I’m ruined, I’m doomed to go hungry this winter, and I have nothing left to retire on!"

“Now, now, don’t worry, Farmer John,” said Mr. Fox calmly. “Sure, things may look bad now, but I’ve been thinking it over, and I've already got it all figured out. I can get rid of the snakes, and get all of your chickens and eggs back too. But I’m afraid it’ll cost a little money.”

“How much?” asked Farmer John.

“Oh, about $700 billion. But don’t worry, Farmer John, trust me on this---just find me the money, and I’ll take care of everything.”

--------

Now, the moral of this story is . . . well, there isn’t one. Farmer John was an idiot for letting a fox guard his henhouse. Fox, Wolf and Weasel were all a bunch of greedy bastards. And the egg merchant who pawned off a bag of snakes on Mr. Fox was a flat-out crooked businessman. Hey, at least the chickens tasted good while they lasted!

But if you were Farmer John, what would you do?

(a) Take Mr. Fox at his word, run into town, and beg all the other farmers in the village for $700 billion so Mr. Fox will take all those snakes off your hands.

(b) Clap Mr. Fox in leg irons, and force him to perform twenty years of hard labor until you can afford to buy all of your chickens back.

(c) Shoot Mr. Fox, sue the egg merchant, blow up the henhouse, and hire a Staffordshire bull terrier next year.

(d) Make sure in the future that you, uhhh . . . don't put all of your eggs in one basket?


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